The council had hoped to appear in last week's list of councils given the go-ahead to ballot tenants on large- scale voluntary transfer plans for 1995-96 (LGC, 10 March).
But it was told it could not be included because of a legal argument over a management contract it wants to include in the transfer deal.
It has expressed dismay that the government had not attempted to resolve the problem before last week's announcement.
As part of the deal it also intends to trickle-transfer empty homes to the society and wants it to take over the management of its remaining 5,000 homes.
Treasury solicitors have delayed agreement, saying European regulations require the management element of the deal to be advertised and subject to tendering.
The council believes it is exempt from these regulations because the main purpose of the deal is to transfer the homes.
The DoE has said the council may be included in the 1995 programme if the legal wrangle is resolved.
'I am dismayed by the amount of time it has taken for the government departments to respond to our plans,' said housing chair Grace Hill.
'Had they given us their legal view earlier we could have tried to sort out the problems in advance of the stock transfer programme being announced.'